Executive Summary

Australian prime minister Tony Abbott has returned home following his first official visit to India, marking the first time the recently-elected Prime Ministers of the two nations have met. With discussions ranging from uranium sales and trade to people-to-people links and defence cooperation, the visit was largely perceived in Australia to have been a success. If sustained, this level of bilateral engagement has the potential to inaugurate a new maturity in Australia-India ties, and an era of wider Indian engagement within the Indo-Pacific region.

The major outcome of the visit was the conclusion of the Australia-India civil nuclear deal, which has been under negotiation since 2012. Prior to the visit, Australian leaders had hinted that the government was satisfied with the safeguards India had agreed to put in place, and were hoping to conclude negotiations during the trip. Though the details are not yet known, the deal will create a framework for the export of Australian uranium to India. With almost third of the world’s reserves, Australian uranium can go a long way towards meeting India’s energy production needs, particularly in light of the Indian government’s plans to increase nuclear capacity to 63,000 MW by 2032 through the addition of 30 reactors.

Of course, India since receiving a waiver from the Nuclear Suppliers Group in 2008, India has concluded agreements to import uranium from a number of countries, including France, Russia and Kazakhstan. However, the symbolic impact of the uranium deal for the Australia-India bilateral relationship mustn’t be underestimated. The Lowy Institute’s 2013 India-Australia Poll found that 70 percent of Indians consider uranium sales from Australia to be important, with only 5 percent of saying that this is not an important issue. The conclusion of the deal will remove a major source of mistrust which has impeded closer relations, signalling that Australia considers India to be a mature and responsible nuclear power.

The uranium deal will also help to kick-start Australia and India’s economic relationship. Although India is Australia’s fifth largest trading partner and bilateral trade is valued at just over AUD $15 billion, the relationship has declined by almost 20 percent in the last year. The economic partnership was high on the agenda, and prime minister Tony Abbott was accompanied by the Minister for Trade and Investment and a delegation of senior Australian business leaders.

There are natural complementarities between prime minister Modi’s emphasis on economic growth and the Abbott government’s own mantra of “economic diplomacy”. Having two leaders at the helm of the relationship with strong economic priorities has the potential to refocus the bilateral trade agenda. The two sides should work towards the timely conclusion of the Comprehensive Economic Cooperation Agreement, which underwent its fifth round of negotiations under the Gillard Labor government in May 2013. However the Modi government’s stance during WTO negotiations on trade facilitation agreements demonstrates that it is unlikely that he will be rushed to compromise on points of contention for the sake of a quick resolution.

Education was also one of the big ticket items on the agenda during this visit. India is already Australia’s second-largest source of international students, although the relationship has not yet fully recovered from the 2009-2010 Indian student crisis. Nevertheless, there is enormous potential for Australian vocational education and training providers to deliver vital skills training to India’s burgeoning youth population.

However, this visit yielded results beyond export-led educational engagement. The two Prime Ministers announced the extension of the Australia-India Strategic Research Fund, and welcomed collaboration between Australian and Indian universities, particularly with regards to joint doctoral programs and degrees. The Australian government also announced the roll out of its signature “New Colombo Plan” program to five Indian universities from 2015. If executed well, this policy will bring about vital engagement of Australian students with Indian educational institutions, imbuing them with the cultural knowledge and experience to produce the next generation of champions for the bilateral relationship.

Progress on these initiatives may also pave the way for closer security cooperation between the two countries. Having just returned from a successful bilateral visit to Japan, it is likely that questions of regional security would have been fresh on prime minister Modi’s mind. And despite some early concerns about his allegiance to the so-called ‘Anglosphere’, prime minister Abbott has committed to prioritising engagement within Australia’s neighbourhood. In recognition of this objective, in his first year since taking office Abbott has undertaken official travel to key Indo-Pacific partners, including Indonesia, China, Japan and India.

In the face of Chinese assertiveness and uncertainty about US engagement with the region, middle power cooperation is likely to be an increasingly important feature of the Indo-Pacific security landscape. As Indian Ocean powers, maritime security and naval cooperation is a natural avenue for Australia and India to expand their security partnership. Bilateral naval exercises are slated to begin in 2015, and both Prime Ministers welcomed preparations for the inauguration of this closer defence engagement. Both Australia and India should push for to conduct sophisticated naval exercises, involving high-end technology.

In the face of a complex regional and global security environment, the challenge now will be to maintain this new momentum in Australia-India relations. One of the most promising outcomes of Abbott’s trip was Mr Modi’s acceptance of Australia’s invitation to undertake a full bilateral visit at the time of the G20 summit in Brisbane in November. This visit will fall just after Mr Modi’s participation in the East Asia Summit and ASEAN-India Summit; the timing of which should serve to position the benefits of closer engagement with Australia in the broader regional context.

But most importantly, Modi’s trip in November will mark the first visit of an Indian Prime Minister to Australia since Rajiv Gandhi in 1986. If sustained, this unprecedented pace of engagement could usher in an era of closer cooperation and genuine progress in the Australia-India bilateral relationship. In order to do so, both sides must go beyond the sometimes transactional nature of the Australia-India relationship to inaugurate a mature and diverse partnership.